Gucci’s fourth-quarter comparable sales gained 0.2 percent,
Paris-based Kering said today in a statement, decelerating from
the third quarter and trailing estimates for 0.8 percent growth.
The shares fell as much as 3.7 percent, wiping about 700 million
euros ($960 million) off Kering’s market value.

Gucci’s revenue growth has been under pressure for about a
year as luxury consumers, particularly from China, switch to
brands they perceive to be more exclusive. That’s made Kering
more reliant on smaller labels such as Bottega Veneta and Yves
Saint Laurent. Both performed strongly in the fourth quarter,
with sales at the latter up 42 percent on a comparable basis.

“Gucci is the key issue for the stock currently, given
disruption from the repositioning in China,” Helen Norris, an
analyst at Barclays, said in a note to clients. She has an
overweight rating on the shares.

Kering is raising prices and tightening distribution at
Gucci in an effort to elevate its biggest brand’s appeal. Still,
the fourth quarter was Gucci’s weakest since the third quarter
of 2009, when comparable sales fell 7 percent.

China Focus

Gucci was affected by slackening tourist flows in Europe,
Kering Chief Financial Officer Jean-Marc Duplaix said on a call
with reporters today. Gucci’s fourth-quarter sales in the U.S.
and Japan continued to cushion a drop in China that was less
severe than in the previous three months, Duplaix said.

Kering is focused on making Gucci’s strategy work in China,
Chief Executive Officer Francois-Henri Pinault said at a
presentation in Paris. That includes slowing the pace of store
openings there, he said. Kering doesn’t plan acquisitions in the
fast-growing so-called accessible luxury segment, the CEO said.

Net income slumped to 49.6 million euros from 1.05 billion
euros. Kering said in November it expected 2013 profit to drop
significantly on costs tied to the disposal of mail order unit
La Redoute and one-time charges at Puma SE. Excluding one-time
items, profit fell 3.1 percent to 1.23 billion euros.

Puma, Europe’s second-largest sporting-goods maker,
yesterday ruled out a rapid recovery after reporting full-year
profit that declined more than analysts estimated. Kering owns
about 84 percent of the German company, which has been
undertaking restructuring measures since 2009.

Kering forecasts growth in both revenue and recurring
operating income in 2014, it said in the statement. An executive
at the presentation declined to confirm a previously announced
target of 24 billion euros in revenue by 2020, saying it’s not a
fixed goal.